Presentation on theme: "The National Finance Center and Hurricane Katrina"— Presentation transcript:
1The National Finance Center and Hurricane Katrina Business Description:USDA organization with a Government-wide service charterPayroll: 132 Federal organizations; 565,000 employees paid each pay period; disburse $72B annuallyFederal Health Benefit Reconciliation: 4 million employees and retirees health benefit selections reconciled with carriers to ensure appropriate coverage and premiumDirect Premium Remittance: operate Government-wide health benefit coverage extensionsFinancial Services:John White, Deputy DirectorJune 2006
2USDA, Office of the Chief Financial Officer Chief Financial Officer’s View -USDA Characteristics:110,000 14,000 offices and field locations300+ national programs$77B in annual spending$128B in assets$100B in loansProgram Management Responsibility Includes:Financial leadership across the enterprise; roughly equivalent in size to 6th largest private sector firm in U.S.Financial policy and planningFinancial systems and operationsGovernment-wide service delivery through the National Finance Center (NFC)
3Scope of USDA CFO Operations in New Orleans (co-located) National Finance Center (NFC)Government-wide payroll/personnel for 585,000 employeesGovernment-wide Human Resource servicesGovernment-wide Health Benefits ProgramsDisbursements and CollectionsData Center ServicesAt time of Katrina, over 1300 employeesCFO Controller Operations DivisionProvides financial services to USDA agencies, including administrative payments (2.5 million annually), interagency payments, reconciliations, and vendor fileAssembles USDA financial reports, including FACTS I & II, and annual consolidated financial statementsAt time of Katrina, almost 300 employeesCFO Financial Systems DivisionOperates the corporate consolidated financial system for all USDA agenciesOperates administrative systems, such as travel and property, for all USDA agenciesCreates and reconciles data extracts for consolidated audit and financial statementsAt time of Katrina, over 70 employees
4Prolog: Accountability – Guiding Principles Embrace that you are in charge and responsible for your organization, its finances, and people.Be prepared to go it alone, do what is necessary to get the job done and care for your staff. In a major situation, there may be no one else to consult about how to proceed.Never forget that during a crisis, people demand leadership, decisions must be made--often in a vacuum, stick to the plan but be flexible.
5Preface: Risk Management – Guiding Actions Managing to deliver the expected business results by considering risks in doing what we do.Focusing on most significant risks associated with the nature of the business:Economic – controls & testing based on what is at stakeOperational – environmental, internal, natural, compliance, technical, organizational, and human risksKeys to successful risk management:Understand the risk profile of the businessLeadership sets the toneIntegrate risk management into day-to-day practices and decisionsEvaluate on clarity, transparency, integrity, & performance
6Preface: Business Continuity Approach – Prepare! Business Impact AssessmentDisaster Recovery PlanBusiness Continuity PlanUninterruptible Power SupplyEmergency Power SupplyTwo annual NFC drillsUSDA and Government wide drillsThree historical near misses
8Hurricane Katrina Activated DR on Friday evening Initial Timeline:Activated DR on Friday eveningDeployed Advanced Teams on Saturday morningCompleted payroll late Saturday eveningShutdown data center and facility early SundayMade disaster declaration Sunday eveningBegan implementation of COOP on Monday
9COOP ConceptConcept of operations:Subscription service for data center, workstations, and bulk print and mailPhiladelphia site used for data center and 101 data center staff seatsGrand Prairie site used for 150 business operations seatsPlans all geared to loss of New Orleans facilities
11Realities of Katrina Implications were larger than anyone imagined Initial reactions:Implications were larger than anyone imaginedThis would be a long-term situationImmediate focus was:Service to the customersAccountability and caring for employeesFiscal accountabilityBalance delivery and personal needs
12Oversight PrioritiesView from the top:Incorporating local efforts into Departmental and Government-wide effortsKeeping long-term, big picture in focusFinding ways to add value while allowing those on the line to keep things moving:PoliciesResourcesContractingFinancialLiaisonMonitoring and Reporting
13Locating and Deploying Staff First 14 days:Local telecommunications infrastructure mostly inoperablePre-planned out-of-town contact numbers functioningNo single data base for locating people in sheltersTravel impacted by roads and gas shortagesFamily issues had to be addressed
14Expanding Capabilities to Meet Long-Term Deployment First 14 days:Duration of COOP means more seats neededTrailers acquired in AtlantaUSDA sites used in D.C., Kansas City, Roslyn, and AlexandriaCustomer sites in Birmingham and Fairfax leveragedSecure connectivity and postal mail were two key infrastructure challenges to achieve
15First Job, First Critical data center resources are recovered First 14 days:Critical data center resources are recoveredEssential services are restoredPayroll is made timely while migrating 60,000 new payees (565,000 total)Financial systems returned online
16Settling In for the Long Haul First 14 days:Subscription service requires sharing of resources during 6-week recovery periodEssential services require dedicated resourcesImpact of Katrina implies 6 months not 6 weeksCustomer dedicated connectivity key issueDecision made to build out in “cold site”
17Focus on Service Delivery First 14 days:Resuming all services requires that all resources (human, technical, and other) be availableService delivery focus is for Agency customers, payees, vendors, and employeesGive employees the challenge and the tools and stay out of their way
18New Orleans Critical to a Timely Return to Full Service Next 60 Days:Returning to full service required a full staffDeployed status had limited seat availability, some security concerns, was costly, and came at a personal sacrifice to manyThe New Orleans facility has the infrastructure to address business needs and support the additional population
19Reconstitution in New Orleans Next 60 Days:Housing, family issues, telecommunications, postal services, and local infrastructure had to be addressedSecurityLogisticsHabitation necessitiesHealth careFamily & friends, FEMA trailers, and cruise ships address most housing needs
20It’s Nice to Have Friends Keys to success:USDA Secretary Johanns and entire USDA family strongly supported COOP needs and the employeesTremendous outreach by Federal colleagues, local Government, local organizations, and people in deployed locationsFood, clothing, education opportunities, friendship, and other assistance
21It’s Nice to Be Prepared Keys to success:Managers and involved staff built the planSame managers and staff practiced the planLive and desktop drills under varying scenarios honed the mental and technical readinessWe know our customers rely on our mission delivery in order to sustain theirs
22Lessons Learned – Governmentwide Consolidated information source needed to support decision-makingCentral clearinghouse for needs and resourcesDesignation of essential services and associated rights is neededHandbook to guide Federal Agencies through extraordinary authoritiesSingle coordination point for Federal efforts and issues
23Lessons Learned - NFCLearned:Communications are always the challenge; planned communications channels are a real aidHaving a well-drilled plan allows for the basics to be accomplished with little intervention and allows management to focus on exceptions and surprises
24Lessons Learned - NFCLearned:Subscription service not an ideal model for essential service providerAdministrative support a key aspect of support for long-term deployed staffFor long-term deployment, coordination of outreach efforts targeting employees becomes an essential task
25Lessons Learned - NFCLearned:Some organizations benefit from close proximity with one anotherMust revalidate plan assumptions, plan contents, and business requirements annuallyYou cannot assume infrastructure items will be there for you
26Working to Mitigate Future Risks Data Center equipment will remain at subscription service location until new primary facility is selectedNew AWS alternatives being exploredAll business operations are being reassessed based on experiencesLessons learned are being incorporated into revised DR and COOP plans
27People, Planning, & Practice People who understand & believe in DR and COOP make it happenPlans have to account for your threats, the business requirements for COOP, and the people side of thingsPractice is the best teacher. Practice on a regular schedule (top priority) and against changing scenarios. Capture the valuable lessons from each exercise.
28EpilogFacing the most devastating natural disaster to impact the United States, the employees of NFC set aside their personal concerns and focused on delivering for their customers.Given such an event, the best came out of people, far and wide, and we are all better because of it.
29One-Year Review of Key Indicators Housing rehabilitation and demolition are well underway while the housing market tightensPace of demolitions has accelerated in the last six monthsNumber of permits issued for rehab has nearly doubledRent prices have increased by 39% and home sale prices have spiked in suburban parishesPublic services and infrastructure remain thin and slow to reboundApproximately half of the bus and streetcar routes running with only 17% of buses in useGas service reaching 41%; electricity reaching 60% of pre-Katrina customer base
30One-Year Review of Key Indicators Labor force in the region is 30% smaller than one year ago with slow growth over the last six monthsUnemployment rate remains higher than pre-KatrinaThe New Orleans metro area lost 190,000 workersIn the past six months, 3.4% more jobs but much of that may reflect the rise in new job seekersUnemployment rate is now 7.2%, higher than last AugustOver $100 billion in federal aid dedicated to serving families and communities impacted by hurricanes Katrina, Rita, and WilmaNumber of displaced and unemployed workers remains highFederal government approved approximately $109 billion in federal aid to the Gulf Coast statesHalf has been dedicated to emergency and longer-term housingEstimated 278,000 workers are still displaced23% remain unemployed
40Questions??? Please ask us questions important to you. “Lagniappe” is a New Orleans’ term often used to indicate getting something extra in a transaction. Our lagniappe for you today includes additional pictures of the post-Katrina New Orleans area.